Guidance to support money market funds.. In September 2008, the Offi ce of the Chief Accountant OCA provided guidance to clarify how banks should treat, for purposes of their balance shee
Trang 1Management’s Discussion and Analysis
Management’s Discussion and Analysis 11
unanimously to require weekly reporting by hedge funds
and other large investment managers of their daily short
positions, as part of a comprehensive investigation of
possible market manipulation
Guidance to support money market funds In
September 2008, the Offi ce of the Chief Accountant
(OCA) provided guidance to clarify how banks should
treat, for purposes of their balance sheets, the fi nancial
support they provide to money market funds within the
same fi nancial services complex This helped clarify for
banks the appropriate accounting treatment for any
assistance they render to money market funds, helping
to protect investors in these funds
Guidance on fair value accounting The credit
market crisis that deepened in September 2008 made
questions about the determination of fair value
particu-larly challenging for preparers, auditors, and users of
fi nancial information, as the concept of fair value
mea-surement assumes an orderly transaction between market
participants OCA and the Financial Accounting Standards
Board (FASB) jointly provided timely clarifi cation, based on
the guidance issued by OCA and FASB staff in FASB
Statement No 157, Fair Value Measurements The clarifi
-cation addressed questions cited as most urgent while the
FASB prepared to propose additional interpretative
guidance on fair value measurement under U.S generally
accepted accounting principles (GAAP) Among other
issues, OCA and FASB addressed the use of
manage-ment’s internal assumptions and broker quotes to
measure fair value when an active market for a security
does not exist
Study on fair value accounting The Emergency
Economic Stabilization Act of 2008 called for the SEC to
conduct a study of mark-to-market accounting standards,
considering the effects of such standards on the balance
sheets of fi nancial institutions, on bank failures in 2008,
and on the quality of fi nancial information available to
investors The agency has dedicated substantial resources
to this study
Implementation of the Troubled Asset Relief Program
The Chairman serves as one of fi ve members of the Financial
Stability Oversight Board, which oversees the U.S Department
of the Treasury’s (Treasury) implementation of the $700 billion
Troubled Asset Relief Program The SEC brings to this role its
unique perspective on investor protection, the maintenance of
orderly markets, and the promotion of capital formation
Regulation of credit rating agencies The Commission began regulating credit rating agencies in the last month
of FY 2007 In FY 2008 the agency examined the three largest rating agencies These examinations uncovered serious shortcomings at these fi rms, including a lack of disclosure to investors and the public, a lack of policies and procedures to manage the rating process, and insuffi cient attention to confl icts of interest The rating agencies all agreed to implement broad reforms to address these problems In addition, the Commission proposed sweeping new rules for rating agencies to bring increased transpar-ency to the credit ratings process and curb practices that contributed to the turmoil in the credit markets The rules are designed to improve investor understanding of credit ratings through enhanced disclosure of the agencies’
methods and performance data, reduce undue reliance on credit ratings, and promote investor confi dence in credit ratings by minimizing confl icts of interest
Formal Cooperation with the Federal Reserve Board In July 2008, the SEC signed a Memorandum of Understanding with the Federal Reserve Board to cooperate and share information related to anti-money laundering, bank brokerage activities under the Gramm-Leach-Bliley Act, clearance and settlement in the banking and securities industries, the regulation of transfer agents, and other key areas In addition to giving both organizations continued insight during the deepening credit crisis, the memorandum also enhanced SEC oversight of the broker-dealer subsidiaries
of bank holding companies The information from the bank holding company level that the SEC now receives under the memorandum will strengthen the agency’s ability to protect the customers of the broker-dealers and the integrity of the broker-dealer fi rms
Ending the CSE Program The Consolidated Supervised Entities (CSE) program was created in 2004 in an effort to fi ll
a regulatory hole regarding the lack of oversight for major investment bank holding companies under the Gramm-Leach-Bliley Act of 1999 Due to the lack of statutory authority from Congress, however, the program was voluntary in nature In addition, the program’s use of the Basel standards for holding company capital and the Federal Reserve’s 10 percent “well capitalized” standard was found inadequate when Bear Stearns nearly failed in March 2008
The SEC ended the voluntary CSE program in September
2008 Broker-dealer subsidiaries of former participants in the program continue to be monitored vigorously
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